The Federal Bureau of Investigation (FBI) will investigate Uber for allegedly using spy software to track down drivers of its competitor app, Lyft Inc. The Wall Street Journal reports Uber Technologies Inc. is being investigated by federal authorities in New York for its use of “Hell,” tracking software to spy on its principal competitor, between 2014 and 2016.
Sources say the “Hell” program allowed Uber to monitor the phones and movements of drivers who worked for both Lyft and Uber and to track the cost and number of rides they provided. Moreover, Uber allegedly contacted those drivers and offered cash incentives to shift their allegiance to the San Francisco-based company.
The new investigation comes just days after newly appointed Uber CEO Dara Khosrowshahi –who replaced founder Travis Kalanick—took office.
FBI will look into Uber’s use of ‘Hell’ software-based program
Uber’s use of the software was revealed by The Information earlier this year, which reported that between 2014 and early 2016 the car service company used a secret software-based program to track how many Lyft drivers were available for new rides and their location.
The report was based on the testimonials of a program involved in the program and another one who was briefed on it.
The program, which was nicknamed “Hell” by Uber drivers, also allegedly showed the company which Lyft drivers also drove for them so it could offer incentives to lure them away from the rival company.
Last week, several Lyft drivers brought a class action lawsuit against Uber over its use of the secret software, but the claim was dismissed. However, Forbes reports the judge left the door open for plaintiffs to amend and refile their lawsuit. Uber’s attorneys at the time argued that the intel it had gathered was “readily accessible to the general public.”
New York attorney’s office also looking into Uber for anti-competitive strategies
The Wall Street Journal reports that the FBI investigation into “Hell” is being led by its New York office, as well as the Manhattan U.S. attorney’s office. The outlet also says that the attorney’s office has been pursuing an investigation into anti-competitive strategies at Uber since early 2016, according to sources familiar with the case.
The attorney’s office report includes some details about the software that Uber has never officially addressed. For instance, it contains statements that Uber created fake Lyft accounts and used them to trick its rival’s system into thinking that possible customers were seeking transportation in several locations around a city – allowing Uber to see which Lyft drivers were nearby and what they charged for a ride. Then, using the gathered information, Uber would set lower prices than Lyft to poach its customers.
The authorities will have to assess whether those actions constitute unauthorized access, or as Uber has put it, an instance of it accessing data already available to the public.
Matt Kallman, an Uber spokesman, told TechCrunch that the company is cooperating with the federal authorities on the investigation, and noted the “Hell” internal software program is no longer used.
New Uber CEO faces several investigations over the company’s practices
Federal authorities are already investigating Uber in two different matters. The company is being investigated for their alleged use of yet another software-based program, codenamed “Greyball,” which was reportedly used to deceive regulators about its operations; and possible violations of the Foreign Corrupt Practices Act, which prohibits payments of bribes to foreign officials.
Federal prosecutors are handling the Greyball case in San Francisco, the city where Uber was founded. Meanwhile, the foreign bribery case is being overseen in the Justice Department headquarters in Washington, D.C.
Uber has faced legal and regulatory scrutiny across a range of its practices in recent years, which contributed to pressure that eventually, resulted in the resignation of former CEO Travis Kalanick –who also co-founded the company—in June. He was replaced by Iranian-American businessman Daro Khosrowshahi, who was CEO of the travel website Expedia, Inc.
Khosrowshahi faces a range of problems now, including accusations of systemic sexism and a bullying corporate custom; a lawsuit with Alphabet over reportedly stolen trade secrets; and issues with the classification of its business in the European Union.
Last month, the company also agreed to settle a Federal Communications Commission investigation into security and privacy failures by agreeing to 20 years of external audits. That agreement came in the midst of reports of Uber using another piece of internal software, nicknamed “God view,” which was allegedly used by drivers to track individual riders, risking their privacy.